Estonia: Saku Olletehase sales increased 7.6% in 1H 2006

In the first half of 2006, Saku Olletehase AS sold over 42 million litres of beverages, a notable 7.6 per cent or 3 million litre improvement on a year ago, the company said in its Interim Financial Statement for 1H 2006 released on August 30.

Six months’ revenues totalled EEK 350 million (€22.4 million), an EEK 45.8 million (€2.9 million) or 15 per cent upswing on the first six months of 2005. The boost in revenue may be attributed to better sales in all product categories and a clear upmarket shift in the category of beer.

Expenses totalled EEK 292.4 million (€18.7 million), EEK 25 million (€1.6 million) or 9 per cent up on the same period in 2005. The principal growth drivers were pay rises in the production and logistics functions which took place in the second quarter and a continuing upsurge in fuel and energy prices.

Profit before tax amounted to EEK 58.8 million (€3.8 million), a solid EEK 21.8 million (€1.3 million) or 59 per cent improvement on the first half of 2005. The dividend distribution gave rise to income tax expense of EEK 23.8 million (€1.5 million).

“Saku Olletehase AS ended the first six months of 2006 with excellent results, including sturdy operating profit. Compared to a year ago, we expanded our market share in the category of beer even further, primarily thanks to the superb performance of our premium beers and successful product development. Consistent focus on profitable growth has proven an effective strategy. In the second quarter we launched all planned innovations both in terms of beverages and packaging, and during the period our people implemented all the strategic decisions adopted for the enhancement of our logistics structure,” said Acting Chairman of the Management Board Janno Veskimae.

“In the second quarter the company responded swiftly to developments in the labour market which triggered a rise in recruitment and payroll expenses but ensured smooth and uninterrupted operation and exceptional output during the summer season,” he added.

According to the Estonian Breweries’ Association, in the first six months of 2006 the Estonian beer market grew by 4 per cent to 63.5 million litres. The market share of Saku Olletehase AS grew by 2 percentage points to 46.5 per cent. In 2006, Saku Olletehase AS has fortified its leading position in the Estonian beer market even further through a dedicated focus on the premium and mainstream segments. In the reporting period, the growth in market share was supported by sustained growth in the sales of Saku Kuld and Carlsberg, a highly successful summer campaign arranged for Saku Originaal, the growth attained by Rock in all types of packaging and a successful launch of the new beer drink Saku Dlight at the beginning of summer.

In the first half of 2006, the Estonian cider market grew by 11 per cent; the market share of Saku Olletehase AS was 30 per cent. At the beginning of summer, Saku Olletehase AS launched cherry-flavoured KISS Cherry and a novel mix of carbonated water and fruit wine called KISS Spritzer which became an instant success.

The drink market continued growing at a swift pace, expanding by 34 per cent. The market share of Saku Olletehase AS remained stable at 25 per cent.

In spring, Saku Olletehase AS launched Saku GIN Long Drink Tonic and in summer, we penetrated the premium alcoholic cocktails market with SIN, a line of three flavours – vodka-watermelon, vodka-lime and rum-cola. The new line was warmly welcomed by consumers and contributed substantially to growth in the company’s market share in the second half of the summer.

According to marketing research company ACNielsen, in the first six months of 2006 the Estonian water market (including both table and mineral waters) grew by 18 per cent, Saku Olletehase AS maintaining its 10 per cent share. In the second quarter Saku Olletehase AS launched forest berry-flavoured carbonated table water Vichy Classique Forest Berry and in June we terminated the distribution of the economy class Montavit line.

Major innovations of the period included the launch of still Vichy Classique in Aqua Pure, a bottle specially developed for non-carbonated table water. The new bottle which was implemented in May is more convenient and ideal for packaging non-carbonated table water as it precludes the development of any side- or aftertaste. In addition, in the summer Saku Olletehase AS was the first to launch in Estonia non-carbonated flavoured near water. The new line is called Vichy VivaFresh and currently contains two flavours: strawberry and lemon-lime. The launch of non-carbonated flavoured water is part of a plan to significantly increase the consumption of healthy drinks, including flavoured water, at the expense of soft drinks.

Since January 27, 1998 the shares of Saku Brewery were traded in the secondary list on the Tallinn Stock Exchange, earlier the shares were traded in the free market.

The joint venture Saku Olletehas was established in 1991. Today 75% of the shares are owned by Baltic Beverages Holding AB - Pripps Ringnes AB and Oy Hartwall AB company - and 25% by small shareholders.

Through big investments Saku Brewery has become the market leader on the Estonian beer market. The market share of Saku in 1999 accounted for 50% of the total market. The total sales of beer and mineral water by Saku amounted to 51.6 million litres in 1999.

The main product of Saku Brewery is Saku Originaal - the leader of Estonia´s beer market since 1995. According to the market research by Emor, Saku Originaal is the most recognised and popular Estonian beer.

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